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DECREE No

DECREE No. 114-CP ON THE 5th OF SEPTEMBER, 1994 OF THE GOVERNMENT, DETAILING THE IMPLEMENTATION OF THE LAW ON THE TAX ON THE TRANSFER OF THE LAND USE RIGHT

THE GOVERNMENT

Pursuant to the Law on Organization of the Government on the 9th of September, 1992;

Pursuant to the Law on the Tax on the Transfer of the Land Use Right on the 22nd of June, 1994, and Resolution No. 215-NQ/UBTVQH9 on the 28th of July, 1994 of the Standing Committee of the National Assembly providing for the bracket for the tax on the transfer of the land use right in the change of the purpose of this use, from agricultural land to non-agricultural land.

At the proposal of the Minister of Finance,

DECREES:

Chapter I

TAX PAYERS AND TAXABLE OBJECTS

Article 1.- Tax payers:

All organizations, households and individuals having the right to use land, when allowed to transfer this right as defined in the Land Law, must pay the tax on the transfer of the land use right, except in the cases stipulated in Article 2 of the Law on the Tax on the Transfer of the Land Use Right and provided in detail in Article 2 of this Decree.

In the transfer of land involving a disparity of the value, the receiver of the larger value shall have to pay the tax on the transfer of the land use right.

In case the organization, household or individual having the right to land use offers the land as mortgage for capital loans, but who cannot pay the debt when it is due, and the State authorized agency decides to transfer its land use right to another person in order to retrieve the capital for the creditor, the concerned organization, household or individual must pay the tax on the transfer of land use right. The authorized State agency, which decides the transfer of the land use right, must deduct fully the tax on the transfer of land use right, and remit it to the State budget before paying the expenditures and the debts to the creditors.

Article 2.- Cases not liable to tax on the transfer of land use right:

1. The authorized State agency stipulated in Article 23 and Article 24 of the Land Law which allots land to the organization, household or individual for use under the provisions of law, including the sale of house under State ownership, together with the transfer of the right to use the land on which a house has been built;

2. The State recovers wholly or part of the land currently used by the organization, household or individual in cases stipulated in Article 26 and Article 27 of the Land Law;

3. The transfer of the land use right to the inheritor, as provided for by the law on inheritance defined in Article 76 of the Land Law, such as the following cases:

- The individuals, and to whom the State has allotted agricultural land for the planting of annual trees or raise aquatic products; after their death, their right to use land shall be legated to their inheritors as prescribed by the law on inheritance;

- The individuals and members of households who are allotted agricultural land by the State to plan perennial trees, or forest land for afforestation, or residential land; after their death, their right to land use shall be legated to their inheritors as prescribed by the law on inheritance;

4. Members of the same family who are allotted land and who transfer land to one another when a household is detached from the family; or the spouses transfer the land use right to each other in case of divorce;

5. The organizations or individuals that are licensed to deal in real estate, when they sell their estate together with transferring the right to land use associated with this estate. These organizations and individuals have paid the turnover tax and profit tax on the total income from the sale of the real estate and the sale of the transfer of the land use light;

6. The organizations, households or individuals that rent land or lease the house on this land to another organization, household or individual, and that have paid the turnover tax and profit tax on the total income from the rent of the land or the lease of the house on this land.

Article 3.- Taxable objects:

The taxable object of the tax on the transfer of the land use right is the value of the area of land subject to the transfer of the land use right as prescribed by law, including the houses and other constructions on this land.

In case of the sale of a house together with the transfer of the right to use the land on which a house has been built, the taxable object is the value of the land subject to the transfer of the right to use, not including the value of the house subject to the transfer of the ownership.

In case of the exchange of land with a disparity in the value of land, the taxable object is the disparity in the value of land.

Chapter II

BASES FOR TAX CALCULATION

Article 4.- Bases for tax calculation:

The bases for calculating the tax on the transfer of the land use right are the land area, the price of the taxable land and the tax rate.

Article 5.- Area of taxable land:

The area of land subject to tax on the transfer of the land use right is the actual area of land to be transferred by an organization, household or individual to another organization, household or individual, in conformity with the administrative land map and the land register of the People's Committee of the commune, ward or township where the land is located. Where there is yet no administrative land map, the taxable land area must be certified by the land administrative agency at district level.

Article 6.- Price of taxable land:

The price of the taxable land, of which the right of use is transferred, is the price set by the People's Committee of the province or city directly under the Central Government, within the price bracket of the Government and in conformity with the practical conditions in the locality.

The land price table for the taxable land shall be set by the People's Committee of the province or city directly under the Central Government, posted up at a public place at the office of the tax agencies and the managerial agency for houses, land and the land administration in the locality.

In case of the sale of a flat belonging to a multi-story building together with the transfer of the right to use the land on which the house is constructed, the price of the taxable land is distributed to each story as provided for in Decree No.61-CP on the 5th of July, 1994 of the Government on the buying, selling of dwelling houses, and dwelling house business dealing.

In case the transfer of the land use right takes place along with the change of the purpose of land use from agricultural to non-agricultural land, the price of the taxable land is the price of the non-agricultural land.

Article 7.- Tax rate applied to the transfer of the land use right without changing the purpose of land use:

The tax rate applied to the transfer of the land use right represents a percentage (%) of the value of the transferred land. More concretely:

1. In case the organization, household and individual that have been granted the right to land use without having to pay the land use right fee, or having not yet paid the land use right fee at the time of the land allotment or of the issue of the certificate of land use right as prescribed by the land law, the following shall apply when they are allowed to transfer the land use right:

a/ With regard to the agricultural, forestry land, or land for aquaculture and salt production, the tax rate is 10% (ten percent).

b/ With regard to residential land or construction land and other kinds of land, the tax rate is 20% (twenty percent).

2. In case the organization, household and individual that have been granted the right to land use and have paid the fee for land use as provided by the land law, and that now transfer the right to land use for the second and or more time after having paid the fee for the first time as stipulated in Item 1 of this Article, the tax rate is 5% (five percent) if they now transfer the land use right for another time.

The organization, household and individual that are granted the right to land use in the following cases, are also considered to have paid the land use fee as prescribed by the land law:

a/ When they are allotted the land they have paid compensations under Decision No.186-HDBT on the 31st of May, 1990 of the Council of Ministers (now the Government) concerning the compensations for the agricultural land and forest land when the land is changed to another use.

b/ They have paid the land use fee to the State budget as stipulated in Circular No.60-TC/TCT on the 16th of July, 1993 of the Ministry of Finance on the buying of houses under State ownership or not under State ownership, together with the granting of the right to use the land with the house on it; or that have been allotted land to build a house and other construction; or that are allotted land in replacement of the payment of the value of the infrastructure projects.

c/ They have bought houses owned by the State, houses of the Housing Business Companies of the State as provided for in Decree 61-CP on the 5th of July, 1994 of the Government on the buying, selling of houses and housing business.

d/ They have bought the house while receiving the right to use the land with the house on it and have paid the income tax under the Ordinance on Income Tax for High Income Earners.

3. In case the exchange of land involving a disparity in the value due to the difference in area and location or land category, the tax rate is 5% (five per cent) of the disparity in the value.

4. In case of assignment of the land use right, following a transfer on which tax has been paid as stipulated in Item 3 of this Article:

a/ In case of exemption from land use fee, or if the land use fee is not yet paid as stipulated by the Land Law, the tax rate shall be applied as provided for in Item 1 of this Article.

b/ If the land use fee has been paid under the Land Law, the tax rate shall be applied as stipulated in Item 2 of this Article.

Article 8.- Tax rate applied to cases of transfer of the land use right along with the change in the purpose of land use.

1. The tax rate on the transfer of the land use right, in case of the transfer of the use of the land from agricultural land to non-agricultural land, is defined as follows:

In case of the transfer of the land use right together with the transfer of the use of land from traditional rice growing to non-agricultural purposes, the tax rate is 50% (fifty per cent); and from other agricultural lands to non-agricultural purposes, the tax rate is 40% (forty per cent).

The traditional rice-growing land stipulated in this Decree is the rice growing land supplied with adequate irrigation and drainage facilities, or having a rainfall enough to ensure stable rice growing.

With regard to the transfer of agricultural land to land for the construction of industrial projects:

a/ From the traditional rice-growing land to land for the construction of industrial projects, the tax rate is 30% (thirty per cent).

b/ From other agricultural lands to the lands for construction of industrial projects, the tax rate is 20% (twenty per cent).

c/ The industrial projects must be built according to plan, and must be ratified by the authorized State agency according to Article 63 of the 1993 Land Law.

2. In case of the transfer of non-agricultural land to agricultural land, the tax rate is 0% (zero per cent).

Chapter III

DECLARATION OF TAX RETURNS AND TAX PAYMENT

Article 9.- Declaration of tax returns:

The organizations, households and individuals, when filling the procedures asking permission to transfer the land use right, must also declare to the tax agency where the land is located about the category of land, its area, location and value, according to the form issued by the tax agency attached to the permit to change the purpose of land use (if any). They must also supply the necessary documents related to the tax calculation at the request of the tax agency.

Article 10.- Time frame for the notification of tax collection:

Upon receipt of the declaration of tax payment for the transfer of the land use right of the taxable objects, the tax agency must issue a receipt and open a book to monitor this question.

Within 30 days (thirty days) after receiving the tax payment declaration on the transfer of the land use right, the tax agency must notify the tax payer of the tax to be paid, and the time limit for the tax payment. The tax must be paid within ten days at the latest after the issue of the tax notice.

Article 11.- Place of tax payment:

The tax on the transfer of the land use right is paid at the local tax agency where the land concerned is located.

In case of exchange of land involving a disparity of the land value, the tax shall be paid at the tax agency where the land of higher value is located.

Article 12.- Time limit for tax payment:

The tax on the transfer of the land use right is paid at one time at the date stipulated in the tax payment notice of the tax agency. When collecting, the tax agency must issue to the tax payer a tax receipt issued by the Ministry of Finance.

The authorized State agency shall issue the certificate of land use right to the receiver of the land use right, when the transferrer of this right has paid fully the tax and produce the receipt of tax payment issued by the Ministry of Finance.

Chapter IV

TAX EXEMPTION, TAX RELIEF

Article 13.- Tax exemption:

1. Tax exemption on the transfer of the land use right is applied to the households and individuals that transfer the land use right to move to and settle in new economic zones, mountainous areas or islands, by decision of the authorized State agency.

The mountainous areas stipulated in this Item is the commune in the mountainous areas as listed by the Committee for Nationalities and Mountainous Areas of the Government.

The new economic zones stipulated in this Item are the areas planned for the settlement of the population to carry out socio-economic development projects under the plans already ratified by the authorized State agency.

2. Tax exemption also applies to the State officials, workers and employees who move to and settle in new economic zones, mountainous areas or islands, in cases of transfer of work by decision of the authorized State agencies.

3. Tax exemption also applies to the State officials, workers and employees who move their residence after accomplishing their tasks in the new economic zones, mountainous areas or island, or upon their retirement.

Article 14.- Tax relief:

The tax on the transfer of land use right is reduced by 50% (fifty per cent) in the following cases:

1. The head of the family is an invalid soldier Categories 1/4 and 2/4, or diseased soldier Categories 1/3 and 2/3;

2. The head of the family is a close relative of a fallen hero and beneficiary of the State allowance regime.

3. Invalid persons having lost their working capacity, minors and lonely elderly people.

4. State officials, workers and employees moving their residence to areas not belonging to new economic zones, mountainous areas, islands, in case of transfer of work, or upon their retirement.

Article 15.- Procedures and competence in considering tax exemption or reduction:

Each object stipulated at Article 13 and 14 of this Decree shall be considered for tax exemption or reduction, when transferring their land use right on the land allotted by the State for the first time (based on the certificate of the land use right and the land register of the People's Committee in the commune, ward or township where the concerned land is located), together with the criteria required for consideration for tax exemption or relief.

The consideration for tax exemption or relief for the transfer of the land use right is effected by the tax agency.

The Minister of Finance shall provide concrete guidance on the procedures and competence in considering exemption or reduction of the tax on the transfer of the land use right.

Chapter V

FINAL PROVISIONS

Article 16.- Handling of violations:

Any tax agency, tax officer, tax payer and other individuals, who take acts of violation of the law on the tax on the transfer of the land use right, shall be sanctioned as stipulated in Article 17, 18, 19 and 20 of the Law on the Tax on the Transfer of the Land Use Right, and other provisions of the Government concerning administrative sanctions in the domain of tax.

Article 17.- Commendations and rewards:

Any tax agency or officer that accomplishes well the task assigned, and all those who have the merit of detecting the violations of the Law on the Tax on the Transfer of the Land Use Right, shall be commended and rewarded according to the common regime of the Government.

Article 18.- This Decree takes effect as from the 1st of July 1994.

All the earlier provisions which are contrary to this Decree are now annulled.

Article 19.- The Minister of Finance shall guide the implementation of this Decree.

Article 20.- The Ministers, the Heads of the ministerial-level agencies, the Heads of the agencies attached to the Government, and the Presidents of the People's Committees in the provinces and cities directly under the Central Government shall have to organize the implementation of this Decree.

On behalf of the Government

For the Prime Minister

Deputy Prime Minister

PHAN VAN KHAI